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Mark-to-Market Change Has Temperatures Rising


Rain or shine, we review the day's biggest stock stories.

The bulls finally got what they wanted: The FASB loosened the mark-to-market accounting rules today. The result: A 2.86% rally in the S&P 500, nearly 5% at the highs of the day.

This has been called a "game-changer" by those who believe it will lead to lending, and thereby out of the recession. But according to a Dow Jones report, Citigroup (C) said that the mark-to-market changes will have no impact on financial statements.

Noticeable laggards today were the financials - which is strange, because most people thought they would rip once mark-to-market rules were changed. Take a look at Citi, as well as JPMorgan (JPM), Bank of America (BAC) and Wells Fargo (WFC): They closed up on the day but lagged behind the rest of the market. Maybe the Citi news is true.

Either way, the market still rallied huge again today. The internals were extremely positive: breadth was 9 to 1 to the upside at the highs, it was a very powerful day. I was starting to think: Will this go down as the greatest bear-market rally ever?

Some traders are starting to notice a break out in the S&P 500. Here's Professor Jeff Cooper's thoughts from today's Buzz and Banter.

"I am getting more than a few emails pointing to the BREAKOUT in the market.

"And while it is true that you have to believe what you see and I wouldn't fade the strength until the price action suggests so (which at the very least would be on a move below 830), it is important to remember that the penthouses of New Yorkers are lined with the counterintuitive.

"A close that offsets 833 is bullish price action and holding that level on a weekly closing basis projects to 890ish.

"At this point in time one may say that the markets are well aware of tomorrows nonfarm payroll loss of over 600,000 and is willing to ignore it. But, it's still early in the day."

The non-farm payroll data Cooper is talking about is what everyone will be watching tomorrow. Current estimates call for a loss of 658,000; however, Briefing's estimates are for -670,000. The number will most likely be closer to what Briefing estimates. Traders will also be watching the unemployment rate. Current estimates call for it to come in at 8.5%.

The big question off tomorrow's report: What will the market do? In some respects, bulls think the market can rip higher to 890 or 900 - they think the numbers are already "baked in." The bear case: The market is looking for any excuse to sell off on the news.

I'm not playing - I have no edge, so I'll wait to see the number and then make my move.

Have a great night, Minyans!
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No positions in stocks mentioned.

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